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Jo C.
Jo C., Barrister
Category: Law
Satisfied Customers: 32086
Experience:  Over 5 years in practice
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Can you advise on probate/ estate enquiries relating to debt

Customer Question

Hello, my father passed away late last year and only now is Probate almost complete (I would expect within 2-3 weeks). He has had a mortgage on the family home since 1980 which was originally taken out to support his partnership family farm between himself and his cousin. The farm had been paying the mortgage each month as it was the farms debt but since my father has passed away, his cousin/ the farm has ceased paying the mortgage and are refusing to pay. My fathers involvement in the partnership was dissolved after ill health for two years and he took out a life insurance policy to cover the mortgage should he pass away so that the family were not liable. However, I still believe that the debt is directly related to the farm and therefore regardless of this life insurance, that they should pay the remaining balance of the mortgage. I appreciate I may only feel this way because my dads cousin isn't exactly popular within the family but I still feel that there may be a case to be made. There were family murmurs of an 'gentlemens agreement' having been made but my dads cousin isn't the kind of person who is likely to honour this agreement unless we can find something in writing which at the moment is unlikely. Do we have a case? Thank you for your help.

Submitted: 2 years ago.
Category: Law
Expert:  Nicola-mod replied 2 years ago.
I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.
I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.
Thank you!
Expert:  Clare replied 2 years ago.
Thank you for your question.
My name is Clare
I will do my best to help you but I need some further information first.
If it was considered to be a debt of the Farm by your father why did he take out the Insurance?
Customer: replied 2 years ago.

Hi Claire,
Thank you for replying - My father as mentioned previously was a partner in the farm and therefore I believe he was concerned that at the time of taking the mortgage on our family home that should he have passed away this mortgage would have automatically have become requested to be taken out of his estate. From what I understand usually the bank therefore demands this be paid in full unless a suitable beneficiary of the estate can be granted a new mortgage. My mother would not have been able to secure a mortgage and therefore it would have been likely that the house would have had to have been sold to fund the outstanding mortgage. Therefore I see it as the insurance was taken out to cover the mortgage so that no financial demands were put on the family.

However, this being said, although this could also be applicable to 'protecting' the farm from said expenditure, I do not want my fathers death to be the reason why a company he was no longer involved in to be 'benefiting' from, especially as I see that the debts of the farm should have been accepted by the farm upon my father signing over his involvement in the partnership/ the partnership being dissolved.

Thank you for your help.

Expert:  Clare replied 2 years ago.
Exactly when and why was the loan taken out - and when was the Insurance taken out?
Customer: replied 2 years ago.
I haven't the exact date but the mortgage was taken out early 1980's and believe the policy was linked to the mortgage at the same time. without involving my fathers cousin to ask exactly why the loan was taken out on the family house I was always advised that the farm has always been loss making (as farming generally is pretty much) and that it was taken out to keep the farm afloat. Thank you
Expert:  Clare replied 2 years ago.
Was there an end date to the mortgage or was it open ended and how much is outstanding now?
Customer: replied 2 years ago.
The outstanding amount is circa £38,000 and I think repayments are approx £750 a month. However arrears have accrued so there are penalty charges of around £500 so far due to my dads cousin stopping paying upon hearing of my fathers death. Thank you and sorry for the delay.
Expert:  Clare replied 2 years ago.
How long was the mortgage taken out for - and who paid the Insurance premium?